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TMI Blog2021 (4) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... ders who provide services to such Telecom Service Providers. As noted hereinabove, the ambit of the term was clearly spelled out in S.No. 2(C) of Appendix-10 to HBPv1 to FTP 2009-14. No different intention regarding the same is discernible from the FTP 2015-20 - the Service Provider is one who in terms of a license granted under Section 4 of the Indian Telegraph Act, 1885 provides Telecommunication Services as defined under Section 2(k) of the TRAI Act. I see no reasons to interpret Service Providers in Telecom Sector in the FTP differently. Thus, exclusion of Service Providers in Telecom Sector from benefit of SEIS is of a service provider providing telecom services. The Impugned Instructions dated 22.05.2019, therefore, sought to impose fresh restrictions on the eligibility of the service providers entitled to the benefit under SEIS, which amounted to amendment in the policy, and is therefore, ultra vires the Foreign Trade Policy - there is no ambiguity in the FTP on the scope of exclusion from SEIS benefit as provided in Paragraph 3.09(2)(i) thereof, even if one is to hold otherwise, the above principles would apply and the interpretation sought to be placed by the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the Act ), notified the Foreign Trade Policy, 2015-20 (hereinafter referred to as the FTP ). 3.2 Chapter 3 of the FTP details the Exports from India Schemes . 3.3 Paragraph 3.01 of the FTP states that there shall be following two schemes for exports of Merchandise and Services respectively: (a) Merchandise Exports from India Scheme (MEIS); (b) Service Exports from India Scheme (SEIS) 3.4 The present set of petitions relate to claim of the petitioners under SEIS. 3.5 The petitioner raised the claim for issuance of Duty Credit Scrips under SEIS claiming that it is providing Engineering Services under Central Product Classification (CPC) Code 8672 and Management Consulting Services under CPC Code 865, as mentioned in Appendix-3D of the FTP. 3.6 By way of the impugned instructions dated 22.05.2019, addressed by the respondent no. 4 to the respondent no. 3, respondent no. 4 opined/instructed that all services, whether Engineering Services (Network Engineering Services, Management and Operation of Network Services (Managed Services) in Telecom Sector or Management Consul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices. He submits that the respondent no. 2 cannot, by way of circulars/instructions, add new conditions or read down the benefit granted under the FTP. In support of his submissions, he places reliance on Atul Commodities Pvt. Ltd. Ors. v. Commissioner of Customs, Cochin, (2009) 5 SCC 46; M/s Deepak Enterprises v. Union of India Ors., 2018 SCC OnLine Del 6724; Yum Restaurants (I) Pvt. Ltd. v. Union of India, 2015 SCC OnLine Del 14548; Atlantic Shipping Private Limited v. Union of India Ors., (Judgment dated 09.03.2021, of the Bombay High Court in WP(C) No. 1827 of 2019); Union of India v. Inter Continental, 2008 SCC OnLine SC 22; Tata Teleservices Ltd. v. Commissioner ofCustoms, (2006) 1 SCC 746; and M/s Bright Engineering Works v. Union of India, 2017 SCC OnLine Del 10471. 6. He further submits that the respondent no. 3, by basing its decision only on the Impugned Instructions dated 22.05.2019, has abdicated its powers to adjudicate on the claim of the petitioner. He submits that the adjudication being quasi-judicial in nature, cannot be influenced by any instructions or circulars issued by even a superior authority. He places reliance on the decisions in M/s. Sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenge the said instructions in form of a Writ Petition before this Court. He further submits that a decision having already been taken by the respondent no. 2 in form of the instructions dated 22.05.2019, the remedy under Section 15 of the Act would be a mere formality. As far as the remedy under Section 16 of the Act is concerned, he submits that the petitioner cannot be denied the remedy of original unbiased adjudication under law, by relegating him to only the remedy of Review under Section 16 of the Act. He submits that the denial of such remedy would itself be a violation of the statutory right created in favour of the petitioner. In this regard, he places reliance on the judgments in M/s. Filterco Anr. v. CST, Madhya Pradesh Anr., (1986) 2 SCC 103; Vistar Construction (P) Ltd. v. Union of India, 2013 SCC OnLine Del 308; Dravya Finance Pvt.Ltd. Anr. v. Life Insurance Corporation of India, Mumbai Anr., 2010 SCC OnLine Bom 740: 2010 (4) Mah LJ 419; Faridabad Iron Steel Traders Association v. Union of India, (supra); Union of India v. Faridabad Iron Steel Traders Association, (supra); Bullion and Jewellers Association v. Union of India, (supra) and Atlantic Shippi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CPC Code 8672 and/or 865. She submits that the services claimed to be provided by the petitioner would in fact, fall within the scope of CPC Code 752 and 754, that is, telecommunication services and telecommunication related services, respectively. She further submits that the nature of services being rendered by the petitioner, having been scrutinised by the expert body, this Court should not interfere with the same. 15. She submits that the reliance of the petitioner on the final CPC version 2.1 is ill-founded inasmuch as the FTP refers only to the provisional CPC and therefore, no benefit can flow to the petitioner by the CPC version 2.1. 16. The learned counsel for the respondents further submits that the Impugned Communication/Instructions dated 22.05.2019 by the respondent no. 4 are merely clarificatory in nature and not a modification of the FTP, as the FTP is otherwise clear that such services are ineligible for availing of benefits under the SEIS. She submits that the term Service Providers in Telecom Sector is very clear in itself and would encompass all service providers in the Telecom Sector, including the petitioners herein. 17. I have considered the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de also to the judgment of this Court in Bright Engineering Works (supra). 24. With the above background, let us consider the FTP 2015-20, upon which the claim of the petitioner(s) is based. 25. Chapter 3 of the FTP 2015-20 provides for Exports From India Schemes . Paragraph 3.00 provides the objective of the Scheme as under: 3.00 Objective The objective of schemes under this chapter is to provide rewards to exporters to offset infrastructural inefficiencies and associated costs involved and to provide exporters a level playing field. 26. Paragraph 3.01 of the FTP states that there shall be two schemes for exports, which are- i) Merchandise Exports from India Scheme (MEIS); ii) Service Exports from India Scheme (SEIS). 27. The claim of the petitioner is under the SEIS. 28. Paragraph 3.02 of the FTP states that Duty Credit Scrips shall be granted as rewards under the MEIS and SEIS. 29. Paragraph 3.07 of the FTP gives the objective of SEIS, in the following words: 3.07 Objective Objective of Service Exports from India Scheme (SEIS) is to encourage export of notified Services from India. 30. Paragraphs 3.08 and 3.09 stipulate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would show that the Service Providers (as defined in Paragraph 9.51 of the FTP) providing Services as notified in Appendix-3D are entitled to SEIS benefit in form of Duty Drawback Scrips on foreign exchange remittance other than those provided in Paragraph 3.09 of the FTP. 35. As noted hereinabove, the petitioner in WP(C) 13429 of 2019 claims to be providing Notified Services as enumerated in S. No. 1(A)(e) having CPC Code 8672, being Engineering Services, and S.No. 1(D)(c) having CPC Code 865, being Management Consulting Service. On the other hand, the learned counsel for the respondents has submitted that the services rendered by the petitioner would fall under the CPC Code 752 and sub-Code 7522 and/or CPC Code 754, which are not part of Appendix-3D and, therefore, are not eligible services for the grant of benefit of SEIS. 36. However, the question of the exact nature of services provided by the petitioner and under which of the above Code(s) they would fall, need not detain me, as the Impugned Instructions dated 22.05.2019 state that any service, whether Engineering Services or Management Consulting Services, in Telecom Sector are ineligible for SEIS benefit. The impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above issue, one may consider the historical evolution of SEIS vis- -vis Service Providers in Telecom Sector. 41. Under FTP 2004-09, the similar Scheme of benefit for Service Exports was branded as Served From India Scheme ( SFIS ). Paragraph 3.6.4.3 of the FTP 2004-09 stated that services and service providers listed in Paragraph 3.18.1 of the Handbook of Procedures, Volume 1 (hereinafter referred to as HBPvl ) shall not be entitled to the Duty Credit Scrip under the Scheme. There was no exclusion of Service Providers in Telecom Sector in paragraph 3.18.1 of the HBPv1. 42. The DGFT thereafter, issued a Circular dated 01.01.2008, stating that foreign exchange earned by Telecom Service Providers for providing services that includes services not originating from India, such as global roaming charges, shall not be eligible for SFIS. 43. A Circular dated 15.07.2010, was thereafter, issued by the DGFT, which inter alia provided as under: 1. xxxx 2. RAs shall review all the previously sanctioned Telecom Sector SFIS Cases (as well as DFCE for Service Providers cases of EXIM Policy (RE-2003)) as per this Policy Circular and the Minutes of the PIC meeting No. 04/AM1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paragraph 3 of the Circular, as regards the implementation of the decision at S.No. 1, 2A and 2B of the PIC meeting on 05.07.2010, was also quashed and set aside. In reaching the above conclusion, the High Court of Bombay explained the kind of scenarios where the earning in foreign exchange by the Indian service provider shall fall within the claim of SFIS benefit, as under: 15. In order to appreciate the nature of the controversy, it would be necessary to spell out the link through which the call between a caller or receiver in India is established with the receiver or caller as the case may be overseas. The call between a person who makes a call and the person who receives the call from an overseas destination is facilitated by four entities; (i) the Indian Access Provider (IAP), (ii) the Indian International Long Distance Operator (IILDO); (iii) the Foreign International Long Distance Operator (FILDO) and (iv) the Foreign Access Provider (FAP). A person who makes a call from an overseas destination, would place that call through a Foreign Access Provider. The call would be routed through the Foreign International Long Distance Operator (FILDO) and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressly. In the absence thereof, it was wholly impermissible for the DGFT, by means of a policy circular, to direct the implementation of what constitutes clearly an amendment of the policy. 46. Though the factual dispute involved in the above case is not present in the present petitions, the above have been quoted only to highlight that the Service Providers in Telecom Sector were considered as one providing telecom services, like the Indian Access Providers (IAP), Indian International Long Distance Operator (IILDO), etc. The judgment further highlighted that the DGFT, in form of a clarification/instructions, could not modify or amend the Foreign Trade Policy and any such attempt is liable to be quashed as being ultra vires. 47. Then came FTP 2009-14, Paragraph 3.12.3 whereof provided that Services and Service Providers as mentioned in paragraph 3.6.1 of HBPv1 shall not be entitled for benefits under the SFIS scheme. Paragraph 3.6.1(g) excluded Service Providers in Telecom Sector (S.No.2(C) of Appendix-10) from the benefit of the scheme and read as under: 3.6.1 Ineligible Remittances and Services for SFIS scheme Foreign exchange remittances other than those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gulatory Authority of India Act, 1997 (hereinafter referred to as the TRAI Act ). Section 2(j) of the TRAI Act defines the term Service Provider as under: (j) Service Provider means the Government as a service provider and includes a licensee. 53. Section 2(e) of the TRAI Act defines the term licensee as under: (e) Licensee means any person licensed under sub-section (1) of section 4 of the Indian Telegraph Act, 1885 (13 of 1885) for providing specified public telecommunication services; 54. The term Telecommunication Service is defined under Section 2(k) of the TRAI Act and is reproduced hereinbelow: (k) Telecommunication Service means service of any description (including electronic mail, voice mail, data services, audio tex services, video tex services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electro-magnetic means but shall not include broadcasting services. 55. A reading of the above provisions would clearly show that the Service Provider is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1969) 2 SCR 481] it was held that cognate and pari materia legislation should be read together as forming one system and as interpreting and enforcing each other. In Vidyacharan Shukla v. Khubchand Baghel [AIR 1964 SC 1099 : (1964) 6 SCR 129] it was held that the Code of Civil Procedure has to be read along with the Limitation Act. In State of Madras v. A. Vaidyanatha Iyer [AIR 1958 SC 61 : 1958 SCR 580, 590 ] SCR at p. 590 it was held that the Prevention of Corruption Act should be read along with the Evidence Act. In Mannan Lal v. Chhotaka Bibi [(1970) 1 SCC 769 : (1971) 1 SCR 253] it was held that the Code of Civil Procedure has to be read along with the Court Fees Act. In Vasudev Ramchandra Shelat v. Pranlal Jayanand Thakkar [(1974) 2 SCC 323 : (1975) 1 SCR 534 ] this Court observed that the Companies Act should be read along with the Transfer of Property Act. 57. In view of the above, it must be held that exclusion of Service Providers in Telecom Sector from benefit of SEIS is of a service provider providing telecom services. The Impugned Instructions dated 22.05.2019, therefore, sought to impose fresh restrictions on the eligibility of the service providers ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of issue of this letter, otherwise your case will be treated as closed. Letter dated 03.06.2019 Your Application is deficient due to following reasons: 1. As per DGFT (HQ) instructions, you are providing services in Telecom Sector and telecom sector is ineligible under SEIS. Therefore all services whether engineering services (network engineering services, management and operation of network services (managed services) in Telecom Sector or Management Consulting services in Telecom Sector are ineligible for SEIS. So your case is rejected. You are requested to remove above deficiencies within a period of 30 days from the date of issue of this letter, otherwise your case will be treated as closed. 61. The impugned orders/communications dated 11.06.2019 and 03.06.2019 therefore, suffer from the same vice as the Instructions/Circular dated 22.05.2019 and are equally liable to be set aside by this Court. 62. On the question of maintainability of the writ petition on account of availability of an alternate remedy to the petitioner, as noted hereinabove, the Impugned Letters have been premised on the Communication/Instructions of the DGFT dated 22.05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se such instructions/orders shall remain binding on the authorities under the Act and any appeal would be decided based thereon. It held as under: 11. It is obvious that the said instruction being contrary to the law as declared by the Supreme Court can have no existence in the eye of the law. As a result we declare the instruction dated 28-4-2008 to be invalid. Consequently, the show cause notices and all the demands raised against the petitioner which are impugned in these writ petitions are also invalid. 12. The learned counsel for the respondent had argued that the petitioner has an alternative remedy by way of appearing in the adjudicatory process as also by way of an appeal as provided under the statute. However, we do not agree with this proposition inasmuch as the basis of the show cause notice as well as the adjudication order is the instruction dated 28-4-2008. Unless and until that instruction is set aside the statutory authorities would continue to apply that instruction and the petitioner would have no remedy before the said authorities. Since the instruction dated 28-4-2008 has been held by us to be invalid, the show cause notice pertaining to the subject ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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